Investing Unscripted Podcast 84: Reckless Predictions for 2024

Our predictions may be wrong. But at least they're fun!

Investing Unscripted Podcast 84: Reckless Predictions for 2024

Note: Transcripts are lightly edited. We may earn commissions from some links. Thanks for the scratch.

Jason Hall: [00:00:00] Hey, everybody. Welcome back to Investing Unscripted. I'm Jason Hall joined as usual by Jeff Santoro, the voice of the people. Hey, Jeff. 

Jeff Santoro: Hey, how are you, my bud? 

Jason Hall: I'm good, dude. And it's not just me and you today. There's a lot of people on the screen in front of us that are going to be on the podcast with us today.

Jeff Santoro: Yes, there are. So for the second year in a row, we are doing a reckless predictions show. And this year we thought it would be fun to invite on. Our podcasting friends, so everyone here is involved in podcasting, some new guests- one new guest, some returning guests. Will introduce them all here in a moment, but we'll have a fun chat here, make some reckless predictions about 2024 and then next year, Jason and I will not invite you guys back and we'll just make fun of your bad calls. So that's how this works. We're going to do it for last year's guests too. 

Jason Hall: Unless they're good. And then we'll invite you back and celebrate them together. 

Jeff Santoro: Correct. But yes. All right. So Jason, why don't you introduce everyone? 

Jason Hall: Yeah. So first of all, this should be familiar to any long term listeners to our [00:01:00] show.

We have Brett and Ryan from Chit Chat Money, and we also have Simon Erickson from 7Investing. I'm going to start things off, Ryan and Brett, Ryan, you go first, folks are familiar with you, but tell a little bit about yourselves. 

Ryan Henderson: Yeah, Brett and I are the hosts of the Chit Chat Money podcast, which all of you guys have been guests on at some point we basically, like yourselves, banter about all things financial markets.

And then we also do basically one or two shows a week where it's diving into either a specific industry or a specific stock, which we call our Not So Deep Dive, which we named in jest because people were saying our research wasn't great. So we called it the Not So Deep Dive instead of the deep dive.

I like to beg to differ. I like to think we do a pretty good job, but- 

Jason Hall: love that the naming is entirely trolling somebody. That's the best part of it to me. 

Ryan Henderson: We were trying to come up with a different name and I thought Not So Deep Dive stuck. 

Brett Schafer: Yeah. And then, yeah, my name is Brett. I'm the other co host of Chit Chat Money.

Also do, writing for The [00:02:00] Motley Fool. So if you see some clickbait headlines out there, those could possibly be written by me. But yeah, Ryan, I think sums it up. We do a lot of stock analysis on the show, a lot of research and trying to interview people. And stuff like that and excited for the, what we may call the classic year end show where we do these reckless predictions because everyone always forgets about what we say, but they're still very fun to discuss, although I know all my predictions are going to be wrong in about a year from now.

Jeff Santoro: That's the fun part when they're wrong. 

Jason Hall: Yeah that's, that is fun, but I think it's, there's like the investing toolbox. I'm going to reach in this before Simon, before you get a chance to share, I just want to say that the values in the planning, not in the outcome necessarily. So it's the fun of thinking through these things and then acting in a totally different manner because you're going to be wrong.

I think that's really important. Simon Erickson, buddy, you and I've known each other for a long time. All the way back to Motley Fool days. Past few years, you've been doing your own thing, 7investing. Tell us about it.

Simon Erickson: I was trying to remember how long it's been, too, Jason. I think it's been about a decade, at least 10 years that you and I have been buddies and talking stocks [00:03:00] together.

I came into the Motley Fool as one of the very first writers for their blog network. If you remember that from a decade ago, yeah, went through the the analyst ranks and worked with the Rule Breakers service. And then also ran a service called Motley Fool Explorer there. And then in 2020, like you said, changed things up a little bit, started my own business called 7investing.

Our website is 7investing.com and our team of advisors finds our very favorite ideas in the stock market, makes actual recommendations each and every month. 

Jason Hall: And you also have a podcast for your members as well. Hence the connection here with our podcasting crew. Simon, it's awesome to have you on.

Brett, Ryan, it is awesome to have you guys back. We're not even going to ask you guys to give us ratings and reviews on our podcast this week. We got too much other stuff to talk about.

Time for some reckless predictions. On to you, Jeff. 

Jeff Santoro: All right. So I thought it'd be fun if we just went around the room.

There's no real format to this. Someone can go first, share a reckless prediction, and then we can all share our thoughts, ask questions, laugh at it, whatever we want to do. I'm just going to [00:04:00] arbitrarily pick Brett because you're the first person on the screen, like the way things are arranged for me.

So why don't you kick us off here? Give us a reckless prediction for 2024. 

Brett Schafer: Okay, a lot of pressure to start out. I have a couple here and I didn't really choose any sort of ranking. So I was just going to choose which 1 kind of felt best to me at the time of recording. And I'll probably go with, I think the 1 that can maybe spur the most discussion.

And this kind of leads back to, me and Ryan did some reckless-ish predictions at the end of 2022 and 1 of them that I had, spoiler, it was wrong. It relates this 1 and it was. Probably a bit too ambitious, but it ended up being directionally correct was that Amazon would finish 2023 as the largest company in the world by market cap.

Which the stock went up about 75 percent this year. So directionally it was correct, but it's still about half the size of Microsoft and Apple. So that was maybe a bit too reckless, but I'm actually going to re up that one and say that Amazon [00:05:00] finishes 2024 as the largest company in the world by market cap. And I don't know how much I believe this one, but I think I believe it a bit more than last year and I think it could spur some great discussion.

So I'm curious, your guys thoughts here. 

Jason Hall: I love this because this is like the equivalent of the broken clock being right, at least twice a day sort of thing with your stock predictions. So I think it's fantastic because it's like a bull, it's like one of those bullish, cause there's always the doomers, right?

The guy, the one guy that like called the market downturn and he got he predicted 700 of the last four crashes, right? Cause he predicted them all the time. And of course, so he now gets invited on CNBC all the time, that kind of thing. So this is like a bullish version of that, Brett. I love it. I love it.

Jeff Santoro: So what's the, what was the thinking in 2022? And what's the thinking now that you think gets them there? You don't have to get into like super detail, but what's the quick thesis on how you, how they get to be the biggest company by market cap? 

Brett Schafer: Yeah. So I think the thesis is honestly similar.

And I thought there would be a pretty big margin inflection [00:06:00] on e commerce slash non AWS side of things in 2023. It wasn't as big as maybe I expected over the first few quarters, but we're really seeing that over the last two quarters. And I think that's just continue into 2024. And I believe that people are really underrating the core profitability of.

The Amazon online business, and then I think there was a ton of bearishness and still probably is some hesitancy around AWS versus Microsoft Azure and look, I'm no expert on the cloud, but if you just listen to what Amazon said in 2023, which is this year. They were helping their customers out by saving cost as there was the software downturn.

They had more exposure to the startup market. So that hurt them a lot more than say, Azure and Google cloud and the generative stuff. They were clearly behind at the start, but are really getting there. Behind some gear going into the next year or so and trying to catch up here. So[00:07:00] people are seeing, Azure's growth rate, they just look at that revenue number and they say, wow, Azure is growing quicker than AWS.

And I think we're just going to see a normalization and then this oligopoly of cloud companies will continue to grow and people are going to get. Like this is not how any of us invest on a one year timeframe, but if I'm looking at a one year timeframe, I could see people by the end of next year becoming optimistic on AWS again.

And the e commerce business gets to 10 percent plus operating margin that we see this company generating over a hundred billion dollars in operating income. And I wouldn't be surprised if they're valued at over 3 trillion. 

Jason Hall: So that's a perfect opportunity before Simon gives his first reckless prediction to promote our next Investing Unscripted 2024 portfolio contest, where we are judging our acumen on a one year rate of returns to stay tuned for that episode coming out.

Soon, Simon, what's your reckless prediction? Your first reckless prediction. You have a passel of them. So you say. 

Simon Erickson: I had to go reckless, Jason. I couldn't just go with something [00:08:00] normal. I had to make this crazy and zany and fun for you guys. 

So my first reckless prediction is that in 2024, the Tesla Cybertruck is going to outsell the Ford F 150 Lightning in America. Now, why is that significant? Because first of all EVs are new. We know this is an important market and we know that the Cybertruck has been delayed for a while, but it's finally got its first deliveries that are leaving out of Austin, going to customers now, right?

We're starting from scratch from ground zero here, whereas the F 150, the gas powered F 150 truck. Is one of the best selling, is the best selling vehicle in America, right? I'm down here in Texas. Best selling vehicle. Yeah. Best selling vehicle. Down in Texas, they have more F 150s than they have kids down in this state, right?

So this is they're trying to change-

Jason Hall: They have a lot of kids in Texas, too. 

Simon Erickson: Let's be honest. That's right. It's right. It's status symbol down here. Ford is trying to transition from the internal combustion engine to the electric vehicle. Obviously it's got an opportunity to disrupt itself, so to speak, if it can put on electric truck.

But it also just product [00:09:00] cut its production forecast by 50 percent for the Lightning. They're saying they're going to go back. They're going to cut it back to 1600 vehicles per week, which would be 83, 000 for the full year. And actually, they're not even selling at capacity right now.

They're selling less than that. Whereas Tesla is saying, Hey, we're going to ramp ours up to 250, 000 at steady state. You're not going to have that in the first year, but I still think when you look at the total numbers, I think the Cybertruck, as new and zany as it might be, outsells one of the most iconic brands in the shift to electric vehicles next year.

Bold. 

Brett Schafer: That's a bold. That is bold. I, that is, yeah, it's interesting how both like Cybertruck's revving and F 150 is really stalled out on, or excuse me, Ford is really stalled out on the Lightning there. It's quite underwhelmed, I'd say. 

Jeff Santoro: I think that's a, I think that's actually a really good prediction, Simon, because when you're comparing it to the electric F 150, for sure, what I wonder with the Cybertruck is how many actual potential I have a feeling it's going to cater to non truck people.

Like the person who never would really buy a truck but wants the Cybertruck. So I [00:10:00] think it's gonna be fascinating to see how that plays out. That's a I like that. It's a good question. Yeah. Go ahead, Jason. Sorry. 

Jason Hall: Yeah, no, a couple thoughts on that too. So I'd paid a deposit for an F-150 Lightning and ended up not getting it because the price changes and accessibility and some stuff like that.

And now I get. I've left them on. I get these regular emails from Ford and I could drive 30 minutes in any direction and go on truck lots and look at 15 of these trucks any given day. They're out there. They're available to buy. So it's definitely an issue for Ford. That's for sure. My biggest question for Tesla, though.

Is can they make a hundred thousand? Can they make 85, 000? Can they actually produce them? They've had so many issues, the steel they're trying to use, the weight of all of the challenges they've had. It's like production health squared. So if they can make enough, they'll sell them. I just don't know if they can make enough.

Simon Erickson: And I think the common mathematical calculation for it is, and this is very technical Jason. So bear with me, but you take Elon's number that he says. And divided by two to what is [00:11:00] actually going to be possible, right? 

Jason Hall: Divided by two plus three years. I think that's right. Yeah. 

Jeff Santoro: Three years. 

Jason Hall: We're at that part, right?

Simon Erickson: So there we go. He says that he's going to get to 125, 000 steady state by the end of next year. And he's already got a million people indicating interest in buying the Cybertruck, whether or not that's actually true or not. I'm certain that some of it is true. It could be interesting. 

Jeff Santoro: All right. Now that it's going to be fascinating to watch for however it shakes out because everything with Elon Musk is interesting in some way.

All right, let's go to Ryan. You can go next. What's your first reckless prediction? 

Ryan Henderson: I'll first add to Simon's point there. Some anecdotal evidence here. I was at the mall, Christmas shopping. And they've got one of those Tesla showrooms, where it's got all the cars, but you like, it's like a faux dealership kind of thing.

Like you can look at them, but you can't buy whatever the there was a Cybertruck and I got to say the demand is certainly there. This line was like out the door around the corner for like tons of people just wanted to go and see this thing. I think I'm, I stand with Jason there, which is the demand is there. The production's kind of the [00:12:00] question. 

My reckless predictions. I'm going to provide three with zero data to support them or back them up. First the Magnificent Seven equal weighted will finish down next year. So 2024, if you take the Magnificent Seven, which I think is Microsoft, Apple, Amazon, Google, NVIDIA, Tesla, meta.

Down. TOtal returns will be negative.

Housing. The average home price in America will finish down 10 percent relative relative to this point, the current price today, down 10 percent same time next year, I said that last year, and I think it's like close. So no data to support it.

Last one Match Group will be acquired. If it's still trading at this price next year, it will have been acquired.

Those are my three. 

Jeff Santoro: First of all, I want to say, Having no data to support your predictions is exactly the vibe of this show. So well done. You nailed the spirit. I think the Mag 7 one is interesting because I was thinking [00:13:00] about this as we were, , not to plug next week's episode too much, but we're doing this portfolio contest.

So tune in next week to hear how that's going to go. 

But I, having done this one year stock picking game for two years in a row now, so much of it is, Not so much how much you like the business, but where it's trading on December 31st, in terms of thinking about just this one year game. So do you think that those seven stocks will underperform simply because they've had such a good run this year?

Or do you think there's. Some number of them that actually do have some fundamental challenges that will manifest in 2024. 

Ryan Henderson: Or is it both? That's a good question. Cause like I said, I've got no data to back it up. So I'm going to go with the I do think some of the valuations- 

Jason Hall: We will not fact check your data, no fact checking here.

Ryan Henderson: So a couple of things I do think Apple has had. There's some headwinds. I think some of the app store stuff, if anything, materializes both between them and Google, whether it's just headlines or potential impact, I think it can affect what people [00:14:00] are betting on for the stock, especially related to the search engine deal or the safari deal.

So I think there's some headwinds for both those companies. NVIDIA, like I said, nothing to back it up, except for the fact that I just. It's done so well that I think it won't be able to do that again. And then yeah, it's probably got to do mostly with just performance that some of them have done so well that it seems I'm just betting on a little bit of mean reversion here.

But like I said, I would not invest this way at all. I just My, my gut tells me it'll finish down and it won't the, I think the S&P- 

Brett Schafer: I was going to say this. I was going to say this combines with mine too. If all these are down, Amazon is up. Those still can be, equal weighted under performance, but Amazon will, we can combine it.

The Amazon will finish the largest company in the world. Still. Here's a question for the 

Jeff Santoro: whole group. Then if let's say Ryan's correct. Okay. And equal weighted the mag seven. Ends the year down. Does the S& P 500 have any [00:15:00] chance of staying above water in 2024? They're 

Ryan Henderson: 30 percent today, right?

Jeff Santoro: 30 percent of the index. So you're making a, you're also making a call that the market finishes down next year too, basically, right? 

Brett Schafer: Depends how far it's down, right? If it's only down like 5, 

Jeff Santoro: down 1 percent or something. 

Jason Hall: Yeah. But you've got to see a lot of stocks rip. . And expecting those stocks to rip when the most powerful, largest, most profitable, biggest companies in the world are down is a really stupid bet.

 I don't think that's the reality, but I do think like mean reversion, just thinking Apple's 30 times earnings, Microsoft's probably similar to that. It's I can make that justification for Microsoft with the AI stuff and their ability to like leverage and monetize. But again, Apple, the headwinds they're facing are.

Material and Google is the same way. Look at what's happening with alphabets facing, they're dealing with. 750 million. That's couch cushion money for alphabet, but it's still like the meaningful impact on their future revenues beyond the, like the cost of some of the litigation they're dealing with monetizing the their [00:16:00] app store and how that carries over to potential implications for Apple.

Those are real things, right? I'm going to throw some numbers out there, Jeff, before I get my prediction because they're relevant. To my prediction, but also to Ryan's and to Brett's. So this is the year to date returns. We're recording this on the 19th of December. So market's not, the year's not over and the market's not quite closed when we're recording this, but the magnificent seven stocks are up between 51 percent and 239 percent this year.

So we have three that are up more than 51%, the other four that are up at least 80 percent and three of those four up more than double. And two of them are essentially tripled, right? Massive returns. Here's the thing. So that's the beginning of 2022, you go back to the beginning of 2023. You go back to the beginning of 2022.

This will blow your mind. If you removed NVIDIA, if you removed NVIDIA from the Magnificent 7, and it was just the Magnificent 6. In aggregates, they'd be basically down from where they were almost two years ago, right? It would be basically [00:17:00] down, right? So what you're essentially predicting is that six of the most profitable companies in the world over a three year period are going to be down.

Jeff Santoro: Okay, that's fine. I'll buy that. 

Ryan Henderson: But I will, I also say I could very easily. Get behind the inverse that they're all going to outperform. 

Jason Hall: Yeah, of course. But again, the, yeah, that's the idea behind these reckless predictions, because I think they, they're like how we feel. . And then when it comes to investing, you don't invest how you feel.

You, and you invest on what you need and what you think long term, you have to think through that. So that's my reckless prediction is that Nvidia is going to lose half its value in 2024. 

Brett Schafer: Oh, that was mine. That was my other one. You stole it. That's right. Me and you, buddy. I was, I didn't say 50%, but I said I got through a major cyclical bust in 2024.

And that's the core of the prediction. Yeah. So maybe you, do you have any details on that? Or I guess mine is just feeling on headlines. Yeah. 

Jason Hall: No, I think it's simple. So there's been a lot of really great math to justify this nuts valuation. [00:18:00] And it's a nuts valuation that you can justify with the right math.

The problem with that math is this is a cyclical business. That's the bottom line. There is a perfectly valid, legitimate chance that buying Nvidia for today's price and holding it for 10 years, you're going to make money and maybe even beat the market, but you're also going to lose half your money within a year.

Both of those two things are very realistic outcomes because all it's going to take is this land grab that we've seen into artificial intelligence, one little bit of bad news on the economy globally. And companies, it's really easy for them just to pull back on spending on data center and cloud spending.

We talked about that with Amazon, what they dealt with startups in VC, like the impact of the VC money drying up affected their business directly. You think about that broadly on the economy and all of a sudden companies that have thrown money at AI to impress investors and to impress customers, and they're not monetizing it.

And then the economy gets bad. They stop spending money. And you know what that means? NVIDIA takes a huge hit and these massive growth numbers we've seen, they [00:19:00] dry up really quickly and the company's fine. And a couple of years later, it'll bounce back. But I think that's a very realistic possibility to happen as soon as 

Brett Schafer: 2024, two things to add on there.

That was part of my, I agree with that. That was part of my reckless position to reckless prediction as well. Two things though, one, the geopolitical risk with China, it is materializing and it actually. May have I've these are a bit of hot takes from some people and people disagree with that, but it may have helped the numbers over the last few quarters as that market tried to really ramp up their supply.

But yeah, pull forward. Yeah. And I think that could have a major impact on revenue. Although again, that's a little bit unpredictable. And then 1, a 3rd thing, or excuse me, 2nd thing for me, 3rd thing overall, Of what is actually happening is all three of the hyperscalers. So Microsoft Azure Amazon web services and Google cloud are trying to vertically integrate more and more with their training chips and their computing chips and all the stuff that goes along with the generative [00:20:00] AI.

And I think the higher the reason in NVIDIA is operating margins are so high is because. The prices per unit that they're selling are extremely high right now because there's a restriction of supply and that is incentivizing like the higher those prices are, I think, is just the more and more incentive for these hyperscalers to invest in their own ships because NVIDIA is such a large take rate on their cloud business now.

And yes, they provide nVIDIA sells so many of these chips for a reason because they're good, but I think it's, you see all these investments from AWS, Azure, and Google cloud into these things. Google cloud really was first here and they're trying to be extremely vertically integrated with all the stuff they're doing.

Yeah, I think that can present a headwind as well. 

Jason Hall: Okay. Mr. Santoro, it's your turn, buddy. All 

Jeff Santoro: right, I'm gonna do mine. And then I want to circle back because Ryan gave us three and I want to make sure we don't gloss over his other two. So let me give my first. We'll come back to Ryan's other two because I'm curious about the housing one in particular.

And then we can come around and see if anyone has any others. So last year, my pick, my prediction was that We [00:21:00] would not see a recession in 2023 and that inflation would improve, not go away, but improve. And I'm sticking this is Jeff bragging. I was, that was a little bit of a brag right there. I had a boy, there we go.

Cause I'm bad at just about everything else with investing. So I'll take it where I can get it. So my, I'm staying macro. I'm staying big picture. I think in 2024 is just, I guess this kind of goes along with. I think the S&P 500 is going to be down at least 20 percent by the end of 2024. I went back and looked cause I didn't remember in 2022, it was down 19 point something percent.

So my basic. thesis is that the market will be worse in 2024 than it was in 2022. So I picked 20 percent as a number. I don't have any data to back this up just to keep that theme going. I just feel I don't know, right now feels. has 2021 vibes to me. The last little bit of time here in the market.

And I was thinking through all the uncertainty that's out there. There's two major [00:22:00] wars happening. We still don't know what's going to happen with a potential recession. There still is inflation. The Fed may or may not cut rates in 2024. There's going to be a very contentious political election this year.

Like I just, it's a lot of uncertainty. And I also think too, Some of the impact I at least I was expecting to see in this year as a result of higher interest rates I think might just be coming later. So I wonder if some of the bad returns I'm predicting in 2024 actually come from business fundamentals starting to crack a little bit.

I don't know a lot of talk about pricing action in 2023 and at some point that ends. So I do wonder if we're going to see. Businesses that have been able to pass those costs along to their customers have, , the chickens come home to roost, so to speak a little bit in 2024. So all that together, my reckless prediction markets down 20 percent or more in 2024.

Jason Hall: That's interesting. So Jeff, I think you want a recession because I think you want cheaper stocks because you want to buy more stocks 

Jeff Santoro: [00:23:00] narrator. He does. There you go.

Jason Hall: Love it. Love it. But I do think it's interesting. You and I've talked offline about this and I've made some videos on our content. YouTube channel about it, like the cost of capital hit VC already, right?

It's hit startups. It's hit IPOs. We've seen that play out in real time, right? We've seen REITs get smashed because REITs always like they front run what's going to happen with private real estate. So that's, we've seen that, if that hap is affect cost capitals, affected real estate. We haven't seen it affect a lot of industrials utilities, besides like next year energy.

We haven't seen it affect a lot of utilities. We haven't seen a lot of the debt laden companies that are, they're just now starting to have to roll the debt, right? It's just beginning. It's just beginning. So I, Jeff, I agree with you directionally, like the impact on like real businesses and like their profitability with interest rates.

That's a 2024 story. I believe that whole heartedly. Ryan, we're going to circle back to you on this one, and then we're going to go backwards to Simon. You talked about housing. I feel like [00:24:00] this is a little bit of the Jason telling Ryan why he's wrong to show, and I don't want to be that way. But thinking about housing I love the, I love what you're thinking here.

But I think it's not going to happen because there's no inventory and because the build rates, they're starting more homes. The builders are starting like home starts picked up a ton this month from last year and month over month. But like permits, building permits rates are still way down.

The, this, the buyer is healthy. People want to, there's massive pinup demand to buy houses. There's no inventory. So I don't think we're going to see as long as owners continue to sit on the sidelines, not selling. I don't think we're going to see a further decline in housing prices, which since I disagree with you means there'll be down like 12, 13 percent this year.

Jeff Santoro: Yeah. That's a, if he disagrees with you, you're right. This is your prediction will come true. So it, 

Ryan Henderson: yeah. And I think sometimes I just like. iT's just the non homeowner in me is [00:25:00] that- 

Jason Hall: You’re, you're trying- 

Jeff Santoro: to manifest it to be so yeah, no.

Ryan Henderson: So I get, okay. I went through this last year, Brett and I talked about this over and over, and I'm sure the listeners got bored of it, but all the points you made, I see that.

And I see that there's this massive undersupply, but at 7 percent plus mortgage rates, the it, it requires basically what was it? 40 to 50 percent of the median income earner in the U S 40 to 50 percent of their monthly income. It's not affordable. It's not dedicated to a new mortgage. And so either I think Michael Burry called it a slow plane crash because you don't have to like, it's not like a fire sale asset, right?

This is something you tend to wait on, but I think as people progressively see their neighbor sell their house at 10 percent less, suddenly there's going to be that price realization where people are like, okay, my Zestimate is not what my home is worth, my home [00:26:00] is worth what people can afford. And the fact is people simply cannot afford it at 8 percent mortgages and.

We're either prices stay exactly where they are, which is very possible and transactions come down, which is what happened this year prices came down slightly, but transactions were down like 50 or 60 percent year over year. So either transactions continue to be slow, or we start to see the average sale price kind of come down a little bit is the way I'm thinking, or everything stays flat and the median income.

Grows gradually for the next eight years until that. Affordability starts to get in the right ballpark where it's been historically, I don't really know what's going to happen. Maybe it is just the non homeowner in me. Yeah, prices should come down because I need to buy one or whatever.

But it's, I just have a hard time seeing how it works when you have to spend 50 percent of your income on a mortgage and if that is the case, like if that's the new reality that people are that housing is that valuable [00:27:00] to people, the stock market is going to have a rough time because there isn't enough discretionary income to go to other goods and services.

Jason Hall: It's called a gift from your boomer parents who have managed to perfectly live through 35 years of positive wealth building tailwinds and tax policy because they know lower interest 

Brett Schafer: rates Yeah, 

Jason Hall: all of the things all the things 

Jeff Santoro: here, but here's my question for the group, right?

And it's tied to Ryan's prediction. And this is me being a little bit naive to all this the In the history of selling houses, right? Zero or low interest rates is the anomaly, not the norm, right? So I don't think we need to get back to sub two percent mortgage rates for people to start moving again.

What I wonder is, it's easy right now for someone to say, I was going to move, but mortgage rates are higher, so I'm not going to. That person has in their head, I want to move. So the question I have is it five and a half percent? Is it five and a quarter? Is it four and three quarters? Like at some point, mortgage rates will get, will break the log [00:28:00] jam a little bit and still be significantly higher than they were two years ago.

But people will start to be like, all right, I waited a year and a half. I waited two years, whatever. My, my kids are now older. They need two bed, whatever the thing is. And I think we'll see things start to be, move a little bit more in the market. The under supply thing is a different story, but I think that'll help a little bit.

I don't know. I don't know what everyone else thinks about it. I like, yeah, 

Ryan Henderson: I like that. And I would also 10 percent might be a little dramatic, like a 10 percent decline, but I think that's what I'm trying to get at Jeff is that there's a lot of people who there's a 

Jason Hall: reason we call this the reckless prediction show, right?

You're right on brand. 

Ryan Henderson: It's going to be a slow grind down because there's a lot of people that are willing to wait. It's a home we're talking about. People aren't like selling it like a stock. So it's. Unless back, we go back to the eye buying days, it was, we're seeing that now where I think it's, and everyone has their own anecdotal evidence where it's like.

Someone saw their neighbor sell their house for a million dollars last year and they say my house is worth more [00:29:00] than their house, but rates are up 8%. They're just not going to sell for a while until they realize that the only bid they're going to get is a certain price. So that's why I think it's going to be like more of a slow, steady grind down unless rates come 

Brett Schafer: back down.

Yeah, let me add some stuff here. First, I will say Jason, you said it was reckless predictions. We do this me and Ryan do something similar every year, and he always has his predictions. And I go how right? How reckless truly is that? But it's okay. This is still a fantastic discussion.

And one of mine is actually going to be almost exactly similar to Ryan's. But I had two parts to it. First is that mortgage rates fall to the 5 percent to 6 percent range. And we've seen it come from 8 percent down to 6, I think, and a half percent today from the guy I follow on Twitter. So my prediction is that they come down, but that is the catalyst for, as basically the same prediction as Ryan of nominal home prices falling by 10 percent or more in 2024, I think I have a few reasons for that.

There's two main ones. One is that [00:30:00] lowering of the mortgage rates is gonna unlock supply from, say, existing homes. So excluding new homes getting built. And I think that's potentially getting underrated by analysts there. I think there could be a lot of people that wanted to sell, but have been waiting, and that can unlock a huge flurry of supply hitting the market from existing homes.

And then second is the record. Multi-family complexes under construction. Or multifamily units, but in these larger complexes that are going to be, rental places is under construction in the United States right now. I think a lot of once that comes online. Yeah, we could see rental average rental rates for monthly rental rates.

That does have a 

Jason Hall: lagging effects on selling prices for houses. 

Brett Schafer: It's true. Yeah. So I think the the spread of. The average mortgage payment versus the rental rate is maybe the widest it's been in a long time. I think that's going to, there's going to be if rental prices don't go up or not rental rates don't go up, and if they even go [00:31:00] down, that could cause more pressure on the difference between affordability for renting versus buying.

And I think that could, even if homes get a little bit more affordable because mortgage rates come back to the normalization of kind of a little bit higher than long term treasuries. I think that could be a catalyst for that as well. 

Jason Hall: Simon, haven't heard you from you for quite some time here, buddy.

What's your second reckless prediction for us? This is 

Simon Erickson: all fascinating. I think that mine the second one, this is related to a lot of the things we've talked about is the opportunity cost of capital. If you talk to people a month ago, they. And anyone felt like a genius who was getting 5 percent for parking their cash in the bank.

I remember cocktail parties. Everyone's Hey, why would I invest in stocks? Only 5%. I'm getting 5 percent a year just by parking 

Jason Hall: it. Yeah. We've had a pretty good year in the stock market in the six weeks since those conversations were happening. 

Simon Erickson: And look at Santa Claus rally. Now, everybody who's got that money part to Santa.

Oh, I should have bought, I should have put it back in the market. These conversations will be different a year from now, even in just in a couple of months. From now, as you look at like the bigger picture, this animal spirits mentality of the stock market, there's [00:32:00] FOMO, there's greed.

This is how these auctions that are called the stock market work. And I think that we've seen money on the sidelines for so long and other viable opportunity costs that eventually people are going to say, I'm putting my money back into equity. So that's going to influence a lot of what happens next year.

S&P included. To answer your question though, my second prediction is related to the bifurcation of financial services now. What I mean by that is it feels to me like things we just used to call banking are not what banks are doing anymore, right? It, it used to be banks would go out there and they'd acquire customers or, they, they'd have these relationships with their customers over time.

Or whatever it might be. And it just seems like banks are just becoming these like highly regulated pools of capital where you've got other companies out there, like upstart that are going out there and originating your loans for you. Or you've got companies on social media that do it really well.

That are acquiring new customers for very low acquisition costs. And then you've got apps like SoFi who are managing that relationship, through this [00:33:00] really user friendly app. Whereas your bank app probably sucks, at least compared to the ones that have built in the last couple of years.

I feel like banks are just becoming like these highly regulated pools of capital. And so my second prediction is I think that if you put a basket of three stocks in each of these, one that we'll call FinTech and one that we'll call banks, the FinTech one I'll call, I'll put SoFi, Upstart, and Affirm Holdings in the FinTech basket.

And then the bank basket, I'm going to put J. P. Morgan, Bank of America, and Citigroup. I think the fintech basket outperforms the banking basket. By 10 percentage points, at least next year. And that probably might be in 2025 as well. Yeah. 

Brett Schafer: I like to take there. Yeah, 

Jason Hall: I'm going to support this one. And I would say that, that basket, Simon, again, the caveat is the economy doesn't tank it close to the end of the year and cause the markets to tumble.

I'd say that basket goes up 30, 40 percent this year. I think that's a reasonable expect. It's it's not reasonable, but it's an, [00:34:00] it's a perfectly reckless, reasonable. 

Simon Erickson: And you look at the market caps too, just to add something to this Jason, I jotted this down JPMorgan is a $500 billion market cap, roughly Bank of America is still $250 billion Citigroup, a hundred billion.

SoFi is $10 billion, Affirm is $15 billion Upstart is $4 billion. But as you see that shift in share, there's really no reason that you can't see those numbers where they are today. Be five, 10X, In a couple of years in the future, I don't think that we've even seen the beginnings of how large these fintech companies are going to become.

Brett Schafer: Yeah. Interesting. It's weird. Everyone has one overlapping with mine because the other one I had that is that the financial sector. Overall is going to be the best performing sector in 2024, which the last couple of weeks has made that a little bit tougher, but I still think that the overall sector is going to do quite well.

Maybe not the big banks who are a little bit more advantaged in 2023, but I think there's a lot of smaller. Traditional financials whether more newer age or even the older ones that old, there's a lot of opportunity here for the [00:35:00] headwinds to go away and the good businesses to start doing, showing their feathers again in 2024.

Jeff Santoro: I like that. I, it's interesting to think about the That sector doing well in 2024. I haven't looked at it this. So I could be completely wrong. You guys can tell me if more than I do on this, but I do wonder Jeff. We all do. Thanks, Jason. I set you up on a tee for that one. I do wonder if there's still some like hangover from everything that went on in March, just in investors minds generally , Oh Banks, scary banks, bad, like I sometimes that stuff just is in the zeitgeist and it impacts things.

All right. I have a silly one and it's my last reckless prediction and I'll share it here as I just want to make sure we stay on time. All right. So news this week that U. S. Steel is going to be. Is agreed to be acquired by Nippon Steel. Yeah. Yeah. But it's a Japanese steel company, right?

US Steel's ticker symbol is X. So if this deal goes through, they will no longer trade under ticker symbol X. So Elon Musk will use this as an opportunity to IPO [00:36:00] Twitter, just so he can have Ticker, but then when it goes public, he will no longer be the CEO, or I know he's not now, but someone else and they'll just change the name back to Twitter.

So that's my reckless prediction that this will be the reason that Elon IPOs Twitter now X just to get the ticker, but then ultimately someone will change the ticker. Yeah, I need 

Jason Hall: this one I need to read the SEC filings for the for the terms It's whatever terms the deal once the deal closes assuming regulators let it pass I need to read the terms to find out how much Elon Musk has given to Nippon Steel, it's about a 7 billion premium.

So I'm guessing he'll probably throw a couple billy goats in there. Yeah. At this point, subsidizing the acquisition- 

Jeff Santoro: In for a penny, in for a pound. 

Jason Hall: Yeah. I think that's just goofy enough to work. 

Ryan Henderson: Santoro. I have a question because you say that, and I think this is the perfect opportunity for some. Revenue lists back to go out there and get the ticker [00:37:00] X and resell it to Elon.

Is there such thing as like ticker pirates, the way they've got like URL pirates? Yeah, 

Brett Schafer: that happened with Meta, M E T A one. I think Facebook now Meta bought it from someone. 

Simon Erickson: Was it NYSC or was it NASDAQ? Which one were they listed on, US Steel before? Do you remember? 

Brett Schafer: I think it's New York Stock Exchange.

Jason Hall: Yeah, US Steel is on there. I can check right now. 

Simon Erickson: Yeah, they're on the New York Stock do an auction for that one. Highest bidder wins. 

Jason Hall: Give it right to Elon. Let's crowdfund the money. Come on. That's right. We can do this.

Jeff Santoro: I think, yeah, we could probably scrape together. Enough. All right.

Jason Hall: So we might have to ask one or two more of our podcast friends to get involved before we jump. 

Jeff Santoro: So we're going to do a Lightning round in a minute or two. But before we do, does anyone else have any other reckless predictions they brought to the table that they want to make sure they. Get off their chest.

Jason Hall: Yeah. I'm going to predict that Jeff Santoro's portfolio returns is actual portfolio returns percentage basis are superior to mine this year. 

Jeff Santoro: What, why would you predict that? 

Jason Hall: Because it's a reckless prediction. It's not going to happen. That's why. 

Jeff Santoro: All right. [00:38:00] You heard it here. We will review in a year.

All so Lightning round. Everyone. What do you want to do, Jason? You want to have everyone ask you answer each question, but really quickly and then we'll just- 

Jason Hall: Here's the rules. Here's the rules. We asked the question. You get three seconds to think about it and then you blurt out whatever your gut reaction is.

No caveats, no explaining it. You just it's out there for the world to own and then you have to own it in a year. That's the deal. 

Jeff Santoro: That's the deal. All right, Jason, you read the first one and you call on who you want to answer. 

Jason Hall: Okay. Okay. All right. Better performance in 2024: bonds or the S&P 500? Ryan Henderson. 

Ryan Henderson: Bonds. Cause I, I got to go with- 

Jason Hall: That's it. That's it. You can't say anything else. 

Ryan Henderson: It follows my reckless prediction. 

Jason Hall: !There you go. There you go. 

Jeff Santoro: All right. Are we going to give everyone else the chance or just going to ask one person? All right. Just one. All right. Next question. What is the best and worst performer in 2024 from the mag seven and I don't mean to pick on the same person, but Ryan, because you brought a mag seven prediction to this podcast, you have to answer this one as well.

Best performer and worst performer [00:39:00] out of the mag seven in 2024. 

Ryan Henderson: I think Amazon will still do well to, Amazon as best performer. I'll take Nvidia as worst performer just to, just cause it's been so good this year. 

Jeff Santoro: Love it. 

Jason Hall: Okay. Ready? Here's the next one. So popular theme. In 2023, a theme of stocks that did well this year, that we'll have a bad year in 2024, Simon.

Simon Erickson: Oh, geez. Okay. Everyone is obsessed with AI right now and everyone's following this Altman, Sam Altman open AI thing. I think that, I don't know if this is a bad theme, but I think that company is going to get slashed into pieces because they're going to have a lot of the talent.

Leaving open AI. I think that, this was just the first dominant of the fall. We've seen it before, like companies like Salesforce really great talent pools for really smart people. Yeah. And open AI certainly did that. But you can just see the divergence, between Ilya and between Sam of is this an open source AI platform, like it was intended to be, or is this a commercialized- 

Jason Hall: The goalposts are getting moved to another stadium in another city for another sport. [00:40:00] 

Simon Erickson: And by the way, this could affect all of humanity, right? AI is, being cautioned by people like Elon Musk and very smart people as possibly blowing up the, humanity. So we've got ultimate riding on this and open AI, I think at last valuation was like a 90 billion company, a hundred billion dollar company.

I think that indirectly answers your question of, what was popular last year, that's less popular this year. I think that open AI is, it's worth significantly less because they're trying to do too many things. And I think there's gonna be a talent migration. 

Jason Hall: And it's going to pull the whole AI theme down with, I think that's reasonable.

I really do. I'm the guy that predicted that there's going to be a hard crash for Nvidia because people are going to stop buying those big AI servers. So I'm not going to argue there. 

Simon Erickson: And one comment on that right now is that NVIDIA has been the one to cash the AI craze so far. It's been in the hardware rather than the software and rather than the platform, but in stuff like prompt engineering out there.

Now people are figuring out how to use this thing, how to train AI to answer questions more efficiently. That's hugely valuable for the enterprise. You're going to see a whole bunch of these, boutique AI firms, whatever we want to call them. The people that did [00:41:00] that at OpenAI, cause they were the front runner and the innovator.

I think they're going elsewhere and they can start their own companies. 

Jeff Santoro: All right. What's next, Jeff? Okay. Brett, this one's for you. Name a company you think will get acquired in 2024. And by whom?

Brett Schafer: Electronic Arts.

Disney. I was going to say Amazon, but I hope it's not Amazon. I

Jeff Santoro: like that. Disney. 

Jason Hall: Yeah. I think we're going to keep seeing consolidation in gaming. There's no doubt about that. There's no way there's no- 

Brett Schafer: I think the clear is the they've been apparently trying to prod, I don't know the rumors that there's rumors on Disney every week.

So it's hard to get a good read, but they've been trying to prod the company to acquire electronic arts. And now that Activision has gone through. There's no, you can't block it anymore. Yeah. So I think there's going to be a lot of companies that want either electronic arts or take two interactive because they see them as viable pieces, but like with Activision Blizzard.

I think it probably they'll probably overpay and it's not a strategic asset. That's going to they're good businesses on their own, but I don't see how it fits in Disney gets a [00:42:00] little bit desperate right now. 

Jason Hall: Maybe Sony buys. 

Brett Schafer: Sony could. Yeah. Yeah. That's a good point. 

Jeff Santoro: All right. Let's do two more, Jason. Then we'll wrap. 

Jason Hall: Okay. All right. So let's see here. Two more. Let's Oh boy. Oh boy. I'm going to skip that one because I already did that one. All right, this is fun. I want to put Simon back on the spot for this one. Will there be a recession in 2024? 

Simon Erickson: Yeah, I think so. 

Jason Hall: Okay. We're done. That's it. That's all I'm going to say.

Jeff Santoro: All right, so here's what we'll do. 

Ryan Henderson: What qualifies as a recession again? 

Jason Hall: What is it? To the rule is a, it's. It's two, two quarters of economic orders, right? Yeah. 

Brett Schafer: Yep. Yep. Two quarters, two quarters. 

Jason Hall: Jeff, what's yours? 

Jeff Santoro: All right. Here's the last one. And it's totally personal. So in the, in our 2023 portfolio contest, Jason, I picked an unportfolio stocks that we thought would do poorly.

And my two picks actually almost outperformed the entire portfolio. So everyone gets to answer wrong is what he said. I did it wrong. Yeah. 

In 2024 Who will have a worst year in terms of returns meta or Tesla? Everyone gets to answer. Brett you go first. 

Brett Schafer: [00:43:00] Oh, both are up so much. Okay. Sorry. I got a Tesla I think short term they have more headwinds.

Jeff Santoro: All right, Ryan. 

Ryan Henderson: I would typically say Tesla but there was rumors today that Mark Zuckerberg is building a 100 foot bunker in Hawaii. And I think that's to protect him from shareholders after he raises capex on Facebook reality lab. Or not Facebook reality lab. So yeah, meta it's the capex is going to shoot up 

Jeff Santoro: again.

Simon Meta or Tesla worst? 

Simon Erickson: My first question is who wins the cage match Mark or Elon? We didn't get that. We're supposed to go to the Coliseum and there was supposed to be this big thing, right? 

Jeff Santoro: Oh, I don't think there's any Elon's a any question. He's, yeah, he'd get his ass kicked. 

Simon Erickson: I think , I mean that, that might be the answer is whoever wins the cage match has a better year for the stock just 'cause enthusiasm.

I don't know, Meta's up 186% year to date Tesla's up 105% year to date. These are both great. Heck of a year for both companies. I probably think that Tesla has a better year next year. So Meta underperforms. 

Jeff Santoro: There you go. All right, Jason, you get to [00:44:00] answer too, and then you can wrap us. 

Jason Hall: Oh, I get to answer too?

Yeah. I don't want to answer. Probably Tesla, because I think they're going to struggle with two things. I think they're going to struggle with the Cybertruck. I really do think it's going to be a problem and they're probably gonna have to make some major changes because there's going to be safety issues because of the weight.

This thing's like launching a cannon at other vehicles. Those are going to be problems. I think they're going to be issues it has to deal with. 

Brett Schafer: And sharp steel corners. Yeah, this stuff. 

Jason Hall: Yeah. And the larger lag that we're seeing with every other EV company out there with weak demand. Eventually, that's going to affect Tesla too.

I really do. I think we're going to have a sea change of like solid state batteries that make the vehicles lighter and vastly increased range and charge time. I think Tesla is going to have a tough year. I really do. I really do.

So I answered that. 

Jeff Santoro: Okay, so you should- 

Brett Schafer: Jeff has to say it. Oh, okay. Jeff has to say it. 

Jeff Santoro: All right. I'll chime in too. I think, but I also think it'll be Tesla. I just think they have more headwinds facing them. I really thought the CapEx spend on reality labs like you Ryan would be the thing that sunk Meta's ship this year.

And I thought the year of efficiency was just, PR nonsense [00:45:00] to calm people down, but there was a little bit more, a little bit more efficiency. So yeah, I would go with Tesla. 

Jason Hall: All right. This is, this has been fun. We crammed a lot of fun into this 50 ish minutes or so with our dear podcasting friends, Brett, Ryan, Simon, really appreciate you guys coming on.

Simon you go first. Where can people find you social media and the wonderful. product you have at 7investing? Where can they find you? 

Simon Erickson: 7investing.com is our website. And actually just this week, Jason, we put together our 2023 year in review. It's a look at every single one of the recommendations that is active on our scorecard.

Not only do we give an update on it, but we also give a conviction rating. We figure which of these are our strongest buys, which of these are our weakest holds. And that's influencing the new recommendations. We're going to be put on the scorecard every month. 

Jason Hall: Awesome. Thanks for that.

We'll be sure to put that in the show notes too, to make it really easy for people to find you. Ryan, what about you? 

Ryan Henderson: Chitchat money, Spotify, Apple, Overcast, wherever you get your podcasts, look up the show, Chit Chat Money. There is,[00:46:00] we're throwing out a potential name change, it's on the table right now, but if you follow Chit Chat Money, the name might change. It should still have chitchat in it, but we'll we'll see about that. Stay tuned. 

Jeff Santoro: The cool, all the cool kids probably the tx . Yeah exactly. All the cool kids change their podcast names. 

Brett Schafer: Yeah. The but for, it'll definitely still have chitchat at the start, so search any of that.

And it's also on YouTube. And then I would say, if you wanna follow on the show we have a Twitter account. @ChitChatMoney. I guess maybe that handle will change in the near future, but that's an easy way to follow us. We post every single one of our episodes there so you can get the links there.

Jason Hall: That's awesome. I'm gonna suggest that you don't change it to chitchat X because I don't think that's going to be the target. 

Brett Schafer: Yeah. No. Yeah. podcast. 

Jason Hall: So guys, again, thank you so much for this. Jeff, this has been a lot of fun. Stay tuned. We got more stuff on the second part of the show after we take a short break. 

Hey everybody, welcome back. I hope you really enjoyed the first part of the show today. We had three great guests, and I think we had a lot of fun with the predictions.

I do feel a little bit, Jeff, [00:47:00] like at some point I turned it into the Jason's picking on Ryan and his bad predictions episode. It was probably a little unfair to Ryan. 

Jeff Santoro: If he never comes back on the show again. We'll know why. 

Jason Hall: Because of you. Obviously. 

Jeff Santoro: Obviously. Yeah. 

Jason Hall: Yeah. All right. So this is the part of the show we're gonna, we're gonna, we're gonna take a look at last year's episode and the predictions.

What exactly are we going to do? 

Jeff Santoro: So we did, this is the second year we've done a Reckless Prediction Show. We had different guests each time and I don't know what we'll do next year, but that's what we did. Last year and this year. So I thought it would be fun if we sent, spent 10 or 15 minutes here at the end of this episode, not necessarily picking on or praising the people who were right or wrong.

But when I went back and listened to that show from last year, and by the way, if anyone hasn't is a newer listener. I do recommend going back and giving that one a listen. I don't remember the exact episode number, but it's from December of last year, probably 30 something. Because the things we were talking about stuck out to me as being [00:48:00] very interesting a year later.

So for example, there was a conversation around the quote unquote, crazy stuff that Elon Musk was saying.

Jason Hall: Episode 31. 

Jeff Santoro: Okay. 31. So we talked about the crazy stuff. Elon Musk was saying on Twitter, because this was back in the, I forget, was this after he took it private? Regardless, it was a long time ago in the history of recent Twitter.

I thought it was just really interesting to hear the five of us and what mindsets we were in at the end of last year versus this year. , it seems like not that long ago, but also seems like a very long time ago. And I, it was a good it was a good lesson to me about how much can change in.

A small amount of time, relatively speaking. So anyway, we're going to go through each of the questions that we asked our guests that episode. And we're not going to necessarily go to what each person said, but we're going to more have a high level conversation about, , the vibes and what we were thinking back then and what happened over the course of the year.

All right, Jason, the first question we asked everyone on that episode was, Will [00:49:00] the S&P 500 hit a new high in 2023? And it was a mixed bag. A couple people said yes, a couple people said no. , I'm curious, you were one of the people that said no, but you also said that the largest companies in the S& P 500 would Have to go up in order for the S& P 500 to hit a new high and you said they wouldn't because basically they're too large 

Jason Hall: Yeah, and I was excessively wrong anybody You guys should remember from the first part of the show where I pulled up the magnificent seven Which are the largest seven and they're all up at least 50 percent this year, right?

And yeah, the thing is like this is the thing that confounded me a little bit is my thought at the beginning of the year And you gotta remember the beginning of last year. So almost two years ago now they were all down a ton and I didn't particularly see a massive amount of upside based on valuation because interest rates were going up.

And I felt like the stock market broadly was going to multiples were going to come down. And what have we seen? Apple hasn't really grown its earnings, but it's trades for 30 times [00:50:00] earnings now. So multiples have increased across the board. And so there's something. Insolvent something insane, irrational, right?

Jeff Santoro: I do think it's interesting. I feel like the people who said, the people who thought the way you did were right in the sense that it does seem like it was multiple expansion for a lot of these businesses more than it was actual, Oh, revenue grew.

Jason Hall: It wasn't earnings growth. 

Jeff Santoro: Correct. So it was, I think it's more about how the market has been. What the sentiment has been this year versus the business fundamentals. So I, and I think you were thinking business fundamentals when you answered that question, so Yeah. 

Jason Hall: Very much and the market. We know the market is vibes drive, vibes, drive, you wrote about this in our newsletter not too long ago that vibes and sentiment drives price. And that's what we've seen this year is the sentiment is very high coming into the end of the year. 

By the way, we're recording this on the 20th. So there's still a week of trading left. It's probably not going to be much of a change. 

Jeff Santoro: Yeah, probably. All right. The next question we asked everyone was to make [00:51:00] a reckless merger and acquisition prediction. These were interesting. So Deidre Woollard what? Deidre Woollard, who was one of our guests. She's a Motley Fool contributor.

If anyone listens to the Motley Fool money podcast, you hear Deidre several times a week. She predicted that someone would buy Kohl's and she thought it might be Amazon. And that was an interesting one. And it made sense, but that has not happened. I don't think Kohl's has been acquired by anyone over the course of this year.

Jason Hall: No, but my God, I'm pretty sure they've been trying. Trying to right? 

Jeff Santoro: Yeah, that's one that may actually still end up being right. Just not during the calendar year of 2023 So we'll have to wait and see on that one. But I thought that was a good, a pretty good guess slash prediction on Deidre's part.

Travis Hoium, another guest from last year on the podcast. 

Jason Hall: Before you say that, real quick, the interesting thing about that prediction too is that there was a lot of talk about Amazon getting more into brick and mortar retail and like last mile for like pickups and stuff. That was part of the idea, that, nothing's changed there either.

Jeff Santoro: [00:52:00] And just really quickly on Amazon I feel like we were all in a very different headspace with Amazon as a company a year ago, too. They were still burning, they were still operating income negative with the e commerce side of the business and still trying to, I hate the word right size, but basically right size the business coming out of the massive, doubling of their distribution footprint over the previous two years. So they were still working out.

Jason Hall: I will posit, Jeff, I will posit that Amazon had a better year of efficiency than Meta. 

Jeff Santoro: Oh, for sure. Yeah. No, I agree with that. But just, it's funny what, how much a year, what a difference a year makes.

We were all wondering and hoping that they'd turn the corner a year ago and it turns like turns out that they, they have in a lot of ways. Okay. Travis Hoium, another guest on the podcast this past year, you can check out his work at asymmetric investing. His prediction was that the Activision Blizzard deal the acquisition of them by Microsoft would not go through.

So that was wrong, but I don't think it was a wild guess back then because it was pretty dicey up [00:53:00] until kind of the end. 

Jason Hall: There was some, it was like, if you looked at Activision stock price, the market clearly didn't expect it to happen. And then broadly across the entire industry, like the second part of his prediction, the deal was going to fall through an Amazon or that Activision stock price would collapse even more directionally.

It made sense because. Across the industry, everybody was trading for a lot less. All of the big gaming studios were trading for a lot less. And since then, of course, that deal went through, and everybody's prices have continued to move higher, because everybody's expecting more consolidation to happen.

Jeff Santoro: And honestly, in, in the current regulatory environment, I think betting against mergers and acquisitions is going to be a winning bet more times than not. Not a bad pick, even if it didn't turn out to, to be correct. 

Jason Hall: Yeah, but it's also, it's fun to be able to make fun of Travis. 

Jeff Santoro: Oh, absolutely. And I'm pretty sure he'll never hear this. So we can, we'll continue to make fun of him throughout this show. 

Jason Hall: I'm gonna take a video, like a clip of this, and I'm going to text it to him. 

Jeff Santoro: Okay, another guest from last year's show Tyler [00:54:00] Crowe, who we just had on a few weeks ago, is the the very smart mind behind Misfit Alpha newsletter, which finds undercovered and under, misunderstood stocks. His prediction for merger and acquisition was that some of these newer, smaller startup electric vehicle companies would be acquired by some legacy autos. And I don't believe that has happened either, unless I missed one along the way. 

Jason Hall: It has been 100 percent incorrect so far. 

Jeff Santoro: But I actually, I remember that at the time thinking that was a very plausible, I was even saying, I could, I think the example I gave on that podcast was I think I used Rivian and one of them GM or something as an example.

Do you see them pick up one of these smart, smaller startups and just let it live as it is under the umbrella, not necessarily turn it into the legacy autos vehicles. That was my prediction on top of his prediction. And none of that has happened. 

Jason Hall: The thing that's the thing that's happened there, Jeff, is the auto industry broadly, like EV sales have really slowed. It's still growing. But demand [00:55:00] has slowed enormously. Like the pace of growth has fallen off. And now you have the Rivians of the world, the Lucids of the world that are really struggling to get uptake. Ford's F 1 50 Lightning. There was huge pin up demand for it. And then the demand just. Evaporated. And now there's trucks sitting on lots, right? That they're trying to sell. 

The appetite from big auto, because they've all cut their own in turn, like GM slice their growth, their expectations for EV sales in half. Basically Ford's done the same thing.

They're all delaying expansion projects, so they're not going to buy anybody else. . And as a result these startups, they're dying on the vine. The wall street journal just released a piece today that said that, like 18 of these either Evie startups or like auto, EV battery startups are going to run out of capital in 2024.

 It's ugly out there. So yeah. He may be right, just maybe early. 

Jeff Santoro: Yeah, a lot of, that's the fun thing about these, these, other than the Activision Blizzard one, which actually has happened, some of these could still take place. 

Jason Hall: Yeah, he and [00:56:00] Deidre may prove to just have been early with their predictions.

Jeff Santoro: Okay, the last merger and acquisition prediction was mine. I said that Zoom would make a big acquisition of some teams like competitor, and that was totally wrong, too. They did nothing. They're still sitting on their significant pile of cash. 

And you built on top of that and said you thought they could actually be acquired, and that does not happen either. So both of those are still things that I guess technically could happen in the future.

The next two questions we asked everyone, I don't think we should spend a lot of time on them because I don't want this to run super long, but we asked everyone's favorite stock for the year, Stock they bet against.

And I'll just read through them real quick. Favorite stocks. Travis chose Wynn Resorts. Deidre chose Prologis. Tyler agreed and went with Prologis as well. I chose Airbnb and you chose Stem. So people who can, who are listening, can look at those your year to date performances and make their own judgments about how right we were to pick these as favorites.

Jason Hall: Foreshadowing, Stem may come up again [00:57:00] in our 2024 portfolio contest that we're going to launch in another couple weeks. 

Jeff Santoro: Ooh, just say, tune in.

Stocks we'd bet against Travis chose Tesla. I chose poorly as well. So we were on the same page with that.

Tyler said any company that said they'd be profitable by the end of the year. He was taking a shot at all of the software companies that were burning cash and unprofitable. 

He, I believe his quote was, color me skeptical that they would be able to turn it around. Some have, if we're being fair, in fact, one of them that started to was Deidre's stock that she bet against, which was Asana.

Yeah. That at least has started to turn the corner. 

Jason Hall: A lot of this company still ended up having really good years because of the vibe of the market as the year has progressed. 

Jeff Santoro: Yeah. And I hedged a little and I went with. All the SaaS companies like Asana. Because, I think I've had Twilio on my mind for over a year now in that regard, and they actually have made some progress.

All right. The last one I think that's interesting to talk about. We asked about if we thought, if the guests thought, stocks or crypto as a [00:58:00] group would do better.

And I don't know it. Crypto has been such a weird, it was a hard question I think for people to answer because there's the big stable quote unquote stable Crypto things like Bitcoin and Ethereum then there's you know, 700, 000 shit coins. So it's hard to lump crypto into a big bucket.

But Deidre thought Bitcoin could come back a little bit. You thought that crypto could have a good year. I felt like crypto would do better than people think, but maybe not have a great year. 

And up until very recently, maybe the last couple of months, crypto did nothing all year. And all of a sudden it's. It's just been on a run. Which is funny how people used to think it was a hedge against the market, and it has not been that, at least in my time watching it, it's been exactly correlated with the market.

The market's been on a run.

Jason Hall: Yeah, through this recording The S&P's up a ton. It's up like 26% this year. Is that right? 

Jeff Santoro: It's 20 something. Yeah. I don't know. Yeah, I haven't looked. 

Jason Hall: Yeah, it's, [00:59:00] it's really good. The Nasdaq 100 is up 55%. That's remarkable, right?

Ethereum's up 81%. Bitcoin's up 154%. And Solana, 657%. Bonkers. Been a good year for crypto. This is the one I got right. This is the one I got. 

Jeff Santoro: Alright, here's the last one. We asked everyone at the end for their own individualized reckless prediction. We call them the bespoke reckless predictions.

Tyler predicted that inflation and interest rates would stay elevated. 

Jason Hall: Hitting .500. I

Jeff Santoro: said that I thought there would be no recession in 2023 and that inflation would be lower trending down, not gone, but that the Fed would continue to raise interest rates. And I was mostly right on that. 

Jason Hall: You and Tyler were both basically right.

Jeff Santoro: Yeah. I think he I think the difference between the two of us is I think he thought inflation would stay a little higher than it did. 

Jason Hall: It is elevated, but like his vibe was like 4%, not close to 3. 

Jeff Santoro: Travis predicted Tesla would lose money in 2023. 

Jason Hall: They made 11 billion [01:00:00] for those scoring at home.

Jeff Santoro: Oh, let's be nice. With a quarter left. It was only 11 billion. That's true. They could lose 12 billion in Q4 and then he'd be right. So let's, we won't know till after the year is over. Love you, Travis. 

 And Deidre predicted that iBuying would, is over and that someone would buy Opendoor.

I don't believe that has happened. iBuying, I don't know how successful it's been.

Jason Hall: iBuying is done. 

Jeff Santoro: Yeah. But no one has bought Opendoor. And the last one, you predicted that tech stocks would underperform the market. 

Jason Hall: Narrator: He was wrong. 

Jeff Santoro: So again it is fun to tease our friends about what they were wrong about, but I really just think it's interesting how different our heads are and where the different space that our heads are in a year later.

And for me it's been interesting too, because having only really paid attention to the stock market and macroeconomic things in the last four years, this one year has been like 25 percent of that history for me. So it's been a year of learning for me. So I think that was fun just personally to listen back on.

So that's [01:01:00] it. That was the recap of the 2023 reckless prediction show. I'm hoping we do this every year, look back and then also make new predictions. And between the earlier part of this episode and this second part, I hope everyone. Found this entertaining. 

Jason Hall: Yeah. I encourage people to read our newsletter this week. I wrote some thoughts I have about predictions. I think it's really useful. 

Just like one thing I want to throw out there to encourage people to look at it. Predictions are almost useless. And I think like the predictions we make and like the predictions that we favor are more like Rorschach tests and anything like the value of predictions is what they tell you about yourself.

So check out our newsletter. You can find it at InvestingUnscripted.com. It's a good little bonus thing to have along with the podcast. 

Jeff, I think we, we did it. 

Jeff Santoro: We did it. 

Jason Hall: All right, everybody. This was fun. Jeff and I love to make predictions. We love to have people come on and share their predictions about these hard, complicating investing finance topics.

But you make your own predictions. So when you screw up, you can't blame us. You can do it. You can screw up on your own. I believe in you. All 

right, [01:02:00] Jeff, see you next time. 

Jeff Santoro: See you next time.

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